Sunday, November 11, 2012

Impact of Venezuelan politics in Miami Real Estate

Venezuela was once one of the main recipients of immigrants from Europe after the second world war. A lot of companies in Venezuela were started by European entrepreneurs who got there with nothing but the willingness to live in a country in peace. 

That trend is now on reverse. Middle and upper class citizens are leaving the country as a result of lack of opportunities and more importantly safety concerns. Earlier this year, a group of students produced a video called “Caracas, ciudad de despedidas” which means Caracas, the city of departures. The main reason why many people are leaving Venezuela is because it is not safe anymore to live there. Caracas was never a safe city but the murder rate now is higher than cities in war and the kidnapping business is flourishing. It is very common to hear stories about people leaving the country after they were kidnapped. This business was showcased in a video called “Extreme World – Venezuela”, which was produced by Ross Kemp, a British journalist who actually had the opportunity to interview a group of kidnappers in Caracas who admit that this has become a very profitable business. According to the video, the average kidnapping lasts a couple of days and the ransom averages five thousand US dollars.

Hugo Chavez was reelected on October 7th as president of Venezuela. He is still very popular after 14 years in charge of the country with the biggest oil reserves in the world. He has used this oil bonanza to finance his “21st century socialism”.  He has taken advantage of the fact that no other president previously had paid much attention to the poor who were always left out.

When Chavez was first elected, a lot of people got scared thinking that he was going to follow the Cuban model, with a socialist state where there is no private property. During that time, property values went down significantly and then they recovered after people started to realize that he was going after big multinationals companies. After being nationalized or left without the capability to obtain foreign currency, many companies have decided to leave the country. Procter and Gamble is one of them. They moved their Latin American headquarters to Panana in 2008 after being unable to obtain foreign currency for years.

Miami has always been one of the main targets of Venezuelans who move abroad. According to the Miami Association of Realtors, Venezuelans are in first place of foreign groups buying real estate in Miami with 16% of the purchases. Doral, a city located in west Miami is the US city with the highest percentage of Venezuelans with over 20%. Real estate agents in Doral who deal with Venezuelan clients are used to hearing the phrase “Plan B”. In fact, a fellow real estate broker started a real estate company called Plan B International Realty. 

Elections are usually milestones and people wait to see election results eagerly to make important decisions. One of my cousins who currently lives in Caracas decided to request asylum in the US after Chavez was reelected last month. He and his wife have stable jobs in Caracas, but the fact that it is not a safe place to live and the lack of career growth opportunities prompted them to make the decision to leave the country. According to the US Department of Homeland Security, at least 4,500 Venezuelan families have been granted political asylum in the US after Chavez came to power.

Miami has always been the thermometer of Latin America. When the political and economic situation gets worse in Latin America more people come to Miami. As local residents say, Miami is the capital of Latin America.

After the real estate bubble burst, Venezuelans have been an important factor of the real estate recovery in Miami in addition to Brazilians and Argentineans. Some of them will continue to buy real estate in Miami as an investment and some other ones will buy after leaving a country where the middle and upper class find themselves in a place where they feel they don’t belong.

Venezuelans buy real estate in South Florida for a variety of reasons. Some buy after they decide to move to a place where they can find a large community of Venezuelans living abroad. Others buy to rent out, looking for a better return on investment than the one provided by banks. And others buy to have a “Plan B” so they can have a place to live in case something extreme happens in Venezuela. The definition of extreme varies, but the milestones most commonly heard are elimination of private property by the government, kidnapping, nationalization of industries by the government and election results. People see election results as a milestone because the presidential term in Venezuela has 6 years and every time Chavez wins, he gets a new opportunity to institute even further his 21st century socialism.

Therefore after last month’s elections, where Chavez won with over 55% of the popular vote, we will definitely see more Venezuelans leaving the country. South Florida real estate agents are eagerly waiting.


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